The directions for the predict-a-number market aren’t entirely clear to me. So I have just three simple questions:

1. How much do you earn? I’m assuming if that (for example) it’s a predict-the-widget-price market, and I buy 10 shares at $43 a share, and the price goes up to $53, I earn $100. Is that correct?

2. My main question: How does this work for selling short? Suppose shares are priced at $43 a share, and I feel the price will go down. But then the price goes up to $1,000. How much do I lose? $953 per share? Where does the money come from? I understand, and correct me if I’m wrong, that in a yes-no market, for example, selling short at $43 is the mathematical equivalent of buying the opposite result for $57. But how does that work on a market where there’s no upper limit? Or is there?

3. Do the predict-the-date markets work in the same way? Does a day count as a dollar, or what?

Thanks!

1. Correct, assuming you are talking about how much you earn when the market is finally cashed out at $53 a share.

2. There is no upper limit. You are in trouble. :) Your account is going to go into negative territory if you can’t afford to buy back the stocks at a high price. You are going to have to beg for more inkles.

3. That’s right. A dollar equals another day. And they function like the other numerical markets otherwise.

Thanks!